If you have defaulted on a loan, keep the following points in mind when you find yourself in such a situation:-
- Financial Institutions have to follow certain processes and give you time to repay dues before repossessing your assets to realize the arrears. If the borrower's account is classified as a non-performing asset, where repayment is overdue by 90 days, the lender has to first issue a 60 day notice.
- If the borrower fails to repay within the notice period, the bank can go ahead with sale of assets. However, to sell the assets, the bank still has to serve another 30 day notice with the details of the sale which will take place.
- During notice period, defaulter can make representation to the bank officials and put forth any objections to the re-possesson notice. The bank is obliged to reply within seven days, giving valid reasons..
- Before auctioning the assets, banks will have to issue another notice (to the loan-defaulter), specifying the fair value of the secured asset, as assessed by the bank's valuers, along with details like reserve price, date and time of auction.
- If the asset is undervalued by the banks, then the loan-defaulter can look for prospective buyers on your own and introduce them to the lender if the defaulter thinks that the property can yield a better price (than quoted by the bank's valuers).
- Banks are required to fund the balance amount after recovering the dues which is a real possibility given that property prices can shoot up beyond the owed amount, as balance money belongs to the defaulter.
- Banks are obliged to follow certain best practices as part of their code of commitment to customers directly or through recovery agents.
- Once you close your home-loan after repaying the amount outstanding or if it recovered by sale of your assets by banks, make sure you have got back all original documents, belonging to you.
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